P. Rea v. Michaels Stores Inc
742 F.3d 1234
| 9th Cir. | 2014Background
- Plaintiffs, California store managers, sued Michaels Stores alleging misclassification as exempt from overtime pay in a putative class action.
- Complaint included an express damages waiver capping class recovery at $4,999,999.99, one cent below CAFA’s $5,000,000 threshold.
- Michaels removed to federal court under the Class Action Fairness Act (CAFA); district court remanded, finding amount-in-controversy not met.
- After the Supreme Court decided Standard Fire (holding attempted class damages waivers ineffective to defeat CAFA removal), Michaels removed again; district court remanded a second time as untimely and alternatively found Michaels failed to prove the $5M threshold.
- Ninth Circuit reviewed timeliness, mootness, and amount-in-controversy standards and evidence, reversing the remand and remanding to the district court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Mootness after state court class certification | Certification and smaller certified class mean damages now below $5M; appeal moot | Post-remand developments do not defeat jurisdiction properly invoked at removal | Not moot; jurisdiction determined by pleadings at time of removal (post-filing developments irrelevant) |
| Timeliness of second removal under CAFA | Second removal untimely under 30-day removal rule | Initial complaint did not affirmatively show removability; Standard Fire changed law, so second removal timely | Timely: 30-day clock never triggered because initial pleading didn’t reveal removability; Roth and §1453(c) support successive removal |
| Effect of plaintiffs’ damages waiver on removability | Waiver bars reaching CAFA threshold | Standard Fire renders such waivers ineffective to prevent CAFA removal | Waiver ineffective; Standard Fire controls, so waiver cannot defeat jurisdiction at time of removal |
| Amount-in-controversy showing | Michaels failed to prove damages exceed $5M | Submitted declarations, manager testimony, and settlement valuation showing managers worked ≥45 hrs/wk, yielding potential >$5M | Reversed: under preponderance standard Michaels met burden; district court clearly erred in finding otherwise |
Key Cases Cited
- Standard Fire Ins. Co. v. Knowles, 133 S. Ct. 1345 (2013) (attempted class damages waivers do not prevent CAFA removal)
- Eagle v. Am. Tel. & Tel. Co., 769 F.2d 541 (9th Cir. 1985) (amount in controversy determined from pleadings at time of removal)
- Visendi v. Bank of Am., N.A., 733 F.3d 863 (9th Cir. 2013) (post-filing developments do not defeat jurisdiction properly invoked at filing)
- Roth v. CHA Hollywood Med. Ctr., L.P., 720 F.3d 1121 (9th Cir. 2013) (30-day removal periods are not exclusive; removal may occur when initial pleading doesn’t reveal removability)
- Lowdermilk v. U.S. Bank Nat’l Ass’n, 479 F.3d 994 (9th Cir. 2007) (prior Ninth Circuit standard requiring legal certainty to defeat removability)
- Rodriguez v. AT&T Mobility Servs., 728 F.3d 975 (9th Cir. 2013) (preponderance of the evidence is proper standard for CAFA amount-in-controversy)
- Lewis v. Verizon Commc’ns, Inc., 627 F.3d 395 (9th Cir. 2010) (defendant must show potential damages could exceed jurisdictional amount)
- Seedman v. U.S. Dist. Court for Central Dist. of Cal., 837 F.2d 413 (9th Cir. 1988) (interpretation of §1447(d) limits reconsideration of remand orders)